The Central Bank of Nigeria (CBN) takes a number of monetary policy decisions, including a change in the level of money supply (M2), the Minimum Rediscount Rate (MRR), or a change in the exchange rate. The central bank defines money supply in two ways: narrow and broad money. Narrow money (M1) is defined to include currency in circulation plus current account deposits with commercial banks. Broad money measures the total volume of money supply in the economy and is defined as narrow money plus savings and time deposits with banks including foreign denominated deposits. There is excess money supply when the amount of money in circulation is higher than the level of total output of the economy. When money supply exceeds the level the economy can efficiently absorb, it dislodges the stability of the price system, leading to inflation or higher prices of goods. In this brief, we shall examine how a change in money supply by the CBN affects people and the economy. When the CBN changes the level of money supply, it does so through the control of the base money. Base money is made up of currency and coins outside the banking system plus the deposits of banks with the central bank. If the central bank perceives that there is too much money in circulation and prices are rising (or there is potential pressure for prices to rise), it may reduce money supply by reducing the base money. To reduce the base money, the central bank sells financial securities to banks and the no-bank public so as to reduce the ability of deposit money banks to create new money. The central bank can reduce the money supply by also raising the cash reserve deposits that banks are required to hold with the central bank. The larger the deposit balances on bank balance sheets, the higher their ability to create more money. Central bank monetary policy, therefore, targets the growth in those deposit balances so as to control the expansion in money supply which could precipitate price distortions. A...

...CHAPTER THREE
RESEARCH METHODOLOGY
3.1 AREA OF STUDY
The area of study o this research work is to determine the effect of monetarypolicy on the performance of banks in Nigeria. This study will cover all the commercial banks that have been in existence since 1975-2004. More so, the aggregates rate is used in assessing their performance.
3.2 METHOD OF INVESTIGATION/SOURCE OF...

...The Effects of MonetaryPolicy on the Economy
Central banks are the national authorities responsible for providing currency and implementing monetarypolicy. Monetarypolicy is a set of actions through which the monetary authority determines the conditions under which it supplies the money that circulates in the economy. Monetarypolicy...

...2011. Before this time, Private Banks don’t have any license for foreign currency exchange services. Central Bank is the sole bank who can control the foreign currency exchange, and foreign exchange rate against US dollar was traditionally designated as around 6 Kyats per dollar since 1975 while the market exchange rate fluctuated between 780 and 1,000 per dollar for the past several years. However, since the government transform into Democracy...

...1. The effectiveness of monetarypolicy in Pakistan
ARTICLE (December 09 2008): Alongside is the text of the speech of the Governor, State Bank of Pakistan, at the Institute of Business Management on December 6. Economic policies aim to increase the welfare of the general public, and monetarypolicy supports this broad objective by focusing its efforts to promote price stability. Embedded in this objective...

...Monetarypolicyeffect on Macroeconomics
Monetarypolicy is the method by which the government, central bank, or monetary authority controls the supply of money, or trading foreign exchange markets. This policy is usually called either an expansionary policy, or a contractionary policy. An expansionary policy multiplies the total supply of...

...country to understand the forces that affect the performance the economic and the interrelationship with foreign countries.
This essay will analyze how loose monetarypolicy has responded to exchange rate movements in open economies, paying particular attention to US and Japan on their quantitative easing program. First of all, it will define the monetarypolicy and explain the techniques using it. After that, the...

...﻿The Federal Reserve and MonetaryPolicy
Overview
In this web quest you will explore the role of the Federal Reserve in controlling the money supply and how actions of the Fed impact the nation’s economy.
The Federal Reserve System is also known as The Fed. Many people don’t realize the importance and power of the Federal Reserve. It was created to provide the nation with a safer, more flexible, and more stable monetary and financial system. The...